The YUKOS affair a year later: the method of "dry sublimation"

Monday, October 25 marked exactly a year since Mikhail Khodorkovsky – then president of YUKOS, the largest oil company in Russia – was arrested at the Tomachevo airport in Novosibirsk.

The press is now offering diffuse debating on the consequences of the YUKOS affair for the Russian politics and economy, as well as elaboration of a new political course by the Kremlin and prospects of the Russian business.

Indeed, notes Izvestia, parliamentary election has taken place while Khodorkovsky has been in jail. As a result, the new members of the Duma have proved to be more controllable than the Duma of the previous convocation.

The presidential election has passed: as expected, Vladimir Putin was reelected.

The new editions of laws on referendums, meetings and demonstrations have appeared. Ministers have been permitted to take positions of party leaders.

Finally, a new stage of strengthening the power vertical has begun, which is accompanied with reformation of the electoral system.

“It would be wrong to mention the direct influence of the YUKOS affair on these changes. Historically, this case has anticipated these changes,” says Izvestia.

Meanwhile, stresses the newspaper, as for the Kremlin, silence has been its major response to the YUKOS affair.

A year has brought no deviations from the stance announced once: “The YUKOS affair in the whole and the case of Mikhail Khodorkovsky in particular is of purely economic nature; its adjustment belongs to the sphere of legal proceedings, rather than backstage political talks.”

By saying that the “state is not interested in ruining the company” Vladimir Putin has nevertheless always insisted that the court will made the final judgment.

“For the Kremlin, the YUKOS affair has thus become a display of independency of the judicial system (which is yet actually trusted by few people): the president says something and other things actually take place,” Izvestia notes.

Predictions of experts who said that Khodorkovsky would be released immediately after the election, haven’t come true. In the opinion of the newspaper, this only stresses: the story of Khodorkovsky involves “nothing personal.”

The fate of prisoner in Matrosskaya Tishina jail is expected to change after the company goes to a new owner.

However, giving more or less trustworthy forecasts is uneasy: too many unexpected things happened last year. Not in vain ” an analyst close to the presidential administration” has on terms of anonymity openly outlined the causes of the miseries which have overtaken Khodorkovsky: “IN what other country the power would allow the business to interfere with politics at the institutional level, rather than the level of lobbying specific commercial projects: mould the parliament to suit his aims, buy packs of deputies and parties? He has done all of that! That’s why he has paid!”

Moreover, former head of YUKOS is known to have attempted, says the newspaper, “to get back to politics from jail.” His article titled “The Crisis of Liberalism in Russia” and published in the central media, was interpreted as a “penitential letter” by some and as the “liberal manifesto” by others. However, notes Izvestia, it wasn’t in demand neither in the former, nor in the latter quality.

The power didn’t wish to heed his conclusions. As Gleb Pavlovsky, president of the Effective Politics Foundation noted to Vremya Novostei, “nobody in the Kremlin will heed theories about liberalism – simply because the people there use a different language to discuss the same issues.”

In the opinion of Pavlovsky, Khodorkovsky’s attempt to start a dialog with the power was doomed to fail primarily due to “selfish interests of his intermediaries,” who were “playing their own game.” Indeed, humans have limited opportunities: “He works with those who are admitted to him” and, to the regret of Pavlovsky, instead of “unselfish translators” of his interests into the language of the Kremlin he only managed to attract a “swarm of blood-thirsty piranhas.”

Khodorkovsky also failed to urge the liberals for consolidation. In the opinion of Izvestia, the URF is extremely concerned for the debating on the rules of electing the new leader, while Yabloko is gradually becoming a “meeting party,” shifting its activities into the streets.

In general, the interest for the message by the prisoner of Matrosskaya Tishina has proved to be quite transient: according to Levada Center, Khodorkovsky’s public statements in the press only fell to memory of 1% of readers at most, but in vain, emphasizes Izvestia: the year of 2006, when the question “Who’s next?” will become most popular is coming soon.

The moment will be proper by that time for non-standard political solutions. “If Khodorkovsky is at large by that time, he’s likely to take up politics and might even play as an independent participant of the political process, rather than a sponsor.”

The authorities are very unlikely to admit that outcome.

On occasion of this sad anniversary Nezavisimaya Gazeta has polled well-reputed experts – renowned politicians and political consultants concerning the fates of YUKOS and Khodorkovsky. The majority of them are certain that Khodorkovsky is unlikely to be released soon.

“How will the case of Khodorkovsky end? He’s be jailed! I’m absolutely confident about this, and YUKOS will be seized away,” says prominent journalist Yulia Latynina.

Seized will be precisely the assets which many are coveting.

In the opinion of Latynina, each of the Kremlin’s parties in insufficiently strong to consume YUKOS by itself, but any of them is sufficiently strong to prevent others from doing this. Therefore, YUKOS will be divided: “The strongest will get Yuganskneftegaz, the weaker will consume fewer bits.”

Latynina says YUKOS is likely to be preserved as a company, “but it will have nothing: just an empty shell.” This gives the Kremlin an opportunity to save its reputation: “Look, just like the president promised, we haven’t destroyed YUKOS!”

As admitted by Gleb Pavlovsky in the above interview for Vremya Novostei, the YUKOS affair is now under solution: what fate expects fragments of this business after disintegration? Who will supervise them?

Pavlovsky is confident that the state state has to act openly here, “enter the scene and offer at least a certain scheme:” otherwise we’ll see a pig in a river of piranhas. This cannot be allowed, for many reasons.

Pavlovsky has his own version of the arrest. He’s certain that “Putin doesn’t act due to momentary irritation.”

At the same time, Pavlovsky has no doubts that existing in the Kremlin is “the irritation in the full sense – irritation for manners of a person, who is dubious, politically non-transparent, claims to conduct his own game with the fate of Russia being the stake.” According to Pavlovsky, “this is a dangerous state for a businessman.”

However, Pavlovsky has no doubts that the adversities which befell Khodorkovsky are likely to favor him: “He’s a big figure who likes to risk. Such people… grow up with pains, in the process of dry sublimation.”

To all appearances, Khodorkovsky will have time for “sublimation:” as mentioned above, the experts polled by Nezavisimaya Gazeta promise serious sentences.

Irina Khakamada has no doubts this will be 4 to 10 years: “The term of pretrial detention and some other factors could be counted, dependently of how decently the authorities want play in the outcome.”

Alexei Mitrofanov (the LDPR faction) also names the term of “up to 10 years,” which could be “cut later.” Anyhow, Mitrofanov is certain that “Khodorkovsky will be imprisoned why Putin holds the power.” According to Mitrofanov, confinement of Khodorkovsky will have no effect on the country: “the company owners will merely be changed.”

In the opinion of renowned economist Mikhail Deliagin, this affair will be finished in two phases: “The news of Khodorkovsky will first be reduced to the level of weather news and then he will be jailed.”

According to Deliagin, he’ll be jailed for 6 to 7 years: “Everybody realizes that he won’t be released – it is similar to Tsar Koschei making his death free.”

At the same time, Deliagin has no doubts that while Khodorkovsky hasn’t broken by now he won’t break in the future: “He’ll keep fighting.”

Besides, “given the absolutely inadequate economic policy” of the incumbent authorities and “quite unambiguous political reforms,” predicts Deliagin, “in a couple of years even $100 million invested in the Russian economy could prove to play the crowbar against which the authorities will have no antidote.” In this sense, Khodorkovsky still has something to hope for.

Mark Urnov, chairman of the Expertise Foundation says it is impossible to predict the outcome of the case of Khodorkovsky for sure: “It feels like the authorities now have no ready-made decisions, and they are at a loss: what is to be done under similar circumstances?”

In the opinion of Urnov, “they” (i.e. the authorities) hoped everything would go “much simpler and the assets would be seized in a lesser scandal.”

As for general consequences of the YUKOS affair, according to Urnov they exist independently on the outcome: “The business has been ousted from politics, while real opportunities for existence of a real opposition have nearly been destroyed, because the opposition cannot exist without the business support.”

Besides, undermined has been the trust of business for the power, as a result of which we observe the increasing capital flight and the worsening reputation of Russia.

“Most likely we’ll have the economy strongly influenced by the state, the increasing corruption and deceleration of serious modernization. In fact, we are now getting back to mid-XIX century, when an official had been an extremely more significant figure than any entrepreneur,” Urnov predicts.

According to Pavlovsky’s interview for Vremya Novostei, “as far as the newspapers show” the prosecutorial arguments on the YUKOS affair “are absolutely helpless. I’d have no doubts that the defense will smash them.” However, in opinion of Pavlovsky, “from the legal point of view all financial and business transactions are more than vulnerable – they cannot be defended at all.” Therefore, ruining such business is very simple: “What is taken in the dark could easily be come to light by a mere police flashlight.”

Georgy Satarov, president of INDEM Foundation adheres to a different view on problems of the so-called initial accumulation period.

Anyone who treads this path inevitably passes certain phases, Satarov says in Yezhenedelny Zhurnal: “Rash enrichment first, very often quite illegally. This is followed by a sharp turn and the road is already up into the mountain, something mighty being on its top – the Knowledge, the Virtue, the Liberty, etc.” In the opinion of the author, both the sentences accompanied with moral judgments and eulogies are equally inapt in this situation: reasonable observers must simply take notice of the objective reality.

Khodorkovsky was following this very path, says the author, but he entered the line of bad luck: “he got into a wrong phase of historic development.” According to Satarov, if the head of YUKOS had turned to the alley he had chosen a couple of years earlier he could have “gained speed and stability.” On the other hand, if he had waited for a couple of years, it is not ruled out that he “wouldn’t have dared to dive into a whirl of building civil society” or would have lost the interest for political and public activities, as Roman Abramovich, his colleague on the “guild of Russian oligarchs.”

According to Gazeta, unlike Khodorkovsky, since Putin’s rule began Abramovich has been rated as the supporter of statehood. He then liked Chukotka, and its people, whom he sincerely wanted to help by becoming their governor. “We are investing money in Russia; all we have is here.”

However, notes Gazeta, he didn’t have big money: for instance, in 1998 Abramovich only earned $1.2 million.

However, he evidently had serious plans. “I will be influencing the power via communication, we need to communicate more,” the one who is now called Red Rom in the West used to say.

However, no dialog with the power was arranged; as a result the Chukotka governor lost interest for affairs of the okrug entrusted to him and rarely attends it now.

Nowadays, Russian businessman No. 1 spends most part of his time in London. Purchasing foreign assets – the Chelsea football club, a castle in France, an island in Croatia – are now the major occupation of the Russian oligarch.

As for Russia, he is selling his assets here. It became known lately that the last 25% stake in Russian Aluminum formerly owned by Abrmovich, has come under control of Basic Element by Oleg Deripaska.

As reported by Gazeta, the global price of aluminum is as high as never before and no serious rivals are available in Russia. Under similar circumstances, the sale promises decent dividends to Abramovich, which are supposed to suffice for many acquisitions abroad.

Most importantly, stresses Gazeta, having no objective reasons to sell his business, Abramovich is likely doing this pursuing the only goal – not to become the “second Khodorkovsky; ” in this connection he has transferred his entire capital (which exceeds $8 billion, according to The Forbes Magazine) abroad. As is said in Russia, with “this fortune and being at large”?

However, renowned economist Yevgeny Yasin says in Yezhenedelny Zhurnal, assessing the capital flight on the whole, “YUKOS has minor involvement in that:” under the high oil prices, the oil revenues can hardly have decent applications in Russia, not to mention the banking crisis of summer, which has been recognized by the Moody’s Interfax Rating Agency of late, says Kommersant.

With the exception of the capital flight, all other indicators are nice, says Yasin: the GDP growth of 7%; inflation has bee declining, although slowly; the stabilization fund has been increasing; the gold and currency reserves are approaching $100 billion.

Nevertheless, Yasin thinks that the economic growth (increasing trust of the business for the power, which enables to painlessly invest in the economic development of the country, rather an increase in the monetary supply as a consequence of the incoming oil revenues being the real motif of economic growth), will inevitably be frustrated.

According to the author, trust “is a strategic factor for economic development in Russia within next 30-40 years.” In the opinion of Yasin, the time for this factor came in 2003: “Independently of his nature, Khodorkovsky realized this; therefore, he decided to become ‘transparent,’ bring give fashion to the stainless business reputation.”

According to Yasin, consistent policy in this sphere could stimulate activities in the Russian business and attract foreigners: “Huge investment would start arriving in production upgrade and innovations.” The prospects have been most encouraging: “If the trust were increased to the level of advanced states in 30 years, in a decade more we’d have be equal to them by the degree o economic development and welfare.”

In the opinion of the author, “we were on the ascent, Vladimir Putin had a real opportunity to fulfill his historic mission,” but this chance remained unused: “The YUKOS affair has broken everything. The flight has been interrupted.”

In the opinion of Yasin, “despite the evident redundancy of this measure,” arrest of Khodorkovsky and a year of keeping him in custody before the trial, as well as “the nature of charges and the demonstrative neglect for elementary standards of legality and humaneness, have shown that “the law exists for everybody but for the power,” which is firm in its belief that “any court in Russia will pass the required, i.e. prompted from the top, verdict.”

Besides, everybody realized since almost each businessman has sins similar to those of YUKOS, “any entrepreneur could easily be imprisoned and his business – be destroyed. Moreover, even if the superiors haven’t prompted, a wave of attacks on entrepreneurs in all instances and by all well-wishers is still underway.”

In general, Yasin says in Yezhenedelny Zhurnal, “the business is never to trust this power again.”

The reforms which have been declared are “going a wrong way” following the presidential election: “Entrepreneurs of all layers, both big and small ones, prefer to keep their head down.” One of them even confessed to the author: “Everybody is afraid of rivals, while we are afraid of officers.” Waiting for economic growth makes no sense in similar conditions.

As Dmitri Oreshkin, head of Group Merkator noted in Moskovskiye Novosti weekly, “the business doesn’t work under compulsion.”

In his another interview Oreshkin reminded the statement by Karl Marx: “The state is a private asset of a bureaucrat” and noted that, to all appearances, the incumbent president “is cleverer than his hawks, but is becoming more dependent of them.”

Georgi Satarov came out with a harsher statement on this point in Novaya Gazeta.

In the opinion of Satarov, “Putin himself is an element of Russian bureaucracy. He cannot challenge it.” Even had he wanted to, he cannot do anything of the sort because for the president who has lost trust of the business “bureaucracy is the only foundation he can rely on.”

According to Satarov, that is the form the president’s weakness has taken. There are, however, some objective reasons as well: the fact that bureaucracy is absolutely uncontrolled. Inefficiency of incumbent control and decay of the bureaucracy, which is solely promoting its own interests and well-being, are two sides of a medal, Novaya Gazeta says.

As stressed by Satarov, “the officials have no time now to run the country because they embezzle it at the rate the first privatizers could not even dream of.”

Gelb Pavlovsky noted in his lengthy interview: “even if Putin is imagined as setting the objective of saving YUKOS, for some reason, he would face an inconceivable knot of problems of a state and moral nature – apparently problems which cannot be solved using existing laws.”

At the same time, Pavlovsky stressed that he’s not “greatly afraid for Khodorkovsky as an individual: however, his gigantic project MENATEP-YUKOS-Russia is finished. “

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